Hit-and-run after a traffic accident, insurance company exempt from compensation
Compiled from: Beijing No. 3 Intermediate People's Court
Some people believe that buying motor vehicle insurance is a way to spread risk, and once an accident occurs, the insurance company should compensate. In fact, according to the agreed exemption clauses, there are some situations where the insurance does not pay. If a driver flees after a traffic accident, can the insurance company be exempt from commercial insurance compensation?
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Case review
On December 14, 2019, Zhang was walking from south to north at an intersection on a certain road in Beijing when he was hit by a small car driven by Xu, which was traveling from west to east. The accident caused damage to the small car and injuries to Zhang. After the accident, Xu fled the scene and was apprehended one week later. According to the "Road Traffic Accident Determination" issued by the Traffic Police Brigade of the Public Security Bureau, Xu was fully responsible for this accident, and Zhang had no responsibility. After the accident, Zhang went to the hospital for treatment and was diagnosed with multiple fractures and soft tissue injuries. He was discharged from the hospital after several days of treatment. According to the appraisal opinion issued by the Judicial Appraisal Center, Zhang was determined to have a Level 10 disability. It was assessed that Zhang's total losses, including medical expenses, hospital meal subsidies, nursing fees, nutrition fees, disability compensation, costs for disability aids, transportation fees, compensation for mental distress, and appraisal fees, amounted to 267,000 yuan.
The vehicle driven by Xu was insured with the insurance company's mandatory motor vehicle third-party liability insurance (i.e., compulsory traffic insurance) and motor vehicle third-party liability commercial insurance (i.e., commercial third-party insurance) for 1 million yuan, and the accident occurred during the insurance period.
Regarding the issue of traffic accident compensation, the victim Zhang sued Xu and the insurance company in court, requesting that Xu compensate Zhang for the losses, bear the case acceptance fee and appraisal fee, and also requesting the insurance company to assume the compensation responsibility within the scope of the insurance coverage. After responding to the lawsuit, the insurance company argued that Xu fled the scene of the accident, which falls under the deductible items stipulated in the commercial third-party insurance, and that the insurance company had already fulfilled its duty to provide notification, so it should not bear the compensation responsibility.
[1] Court Opinion
The trial court held that when a motor vehicle insured with compulsory third-party liability insurance (i.e., Compulsory Traffic Insurance) and third-party commercial liability insurance (i.e., Commercial Third-Party Insurance) is involved in a traffic accident causing damage, and the parties simultaneously sue both the tortfeasor and the insurance company, the people's court shall determine the liability for compensation according to the following rules: (1) the insurance company covering the compulsory traffic insurance shall first compensate within the liability limit; (2) any shortfall shall be compensated by the insurance company covering the commercial third-party insurance according to the insurance contract; (3) if there is still a shortfall, the tortfeasor shall compensate in accordance with the relevant provisions of the Road Traffic Safety Law and the Tort Liability Law. In this case, Xu bears full responsibility for the traffic accident and also fled the scene. According to the evidence submitted by the insurance company, it has fulfilled its duty of notification. Therefore, Zhang's reasonable losses should be compensated by the insurance company within the liability limit of the compulsory traffic insurance, and any shortfall should be compensated by Xu according to the full proportion. The trial court ultimately ruled that the insurance company shall compensate Zhang for a total loss of 198,000 yuan within the compulsory traffic insurance limit, and the remaining amount of approximately 65,000 yuan shall be borne by Xu.
Xu appealed, mainly arguing that the insurance company did not fulfill the obligation to clearly explain the exemption clause, and therefore the insurance company should bear compensation within the scope of commercial third-party liability insurance.
The Beijing Third Intermediate People's Court, after trial, held that the core dispute in the case was whether the insurance company could be exempted from liability under the scope of commercial insurance. In this traffic accident, Xu was fully responsible and fled the scene after the accident; this situation falls under the prohibitive circumstances stipulated by laws and administrative regulations. The insurance company had highlighted this exemption in the policy in bold to notify the insured. Although Xu did not acknowledge this, his agreement to purchase commercial third-party insurance was his true expression of intent, and the insurance premiums were also paid by Xu. Given that the policy was authentic and Xu was aware of the insurance conditions, Xu should bear the corresponding responsibility. The Third Intermediate Court ultimately ruled to reject Xu's appeal and uphold the first-instance judgment.
Civil Code of the People's Republic of China
Article 1179
Injuring another causing personal harm requires compensation for reasonable expenses such as medical fees, nursing costs, transportation, nutrition, hospital meal subsidies for treatment and recovery, and lost income from missed work. If disability results, assistive device costs and disability compensation must also be paid; if death results, funeral expenses and death compensation must be paid.
Article 1208
If a motor vehicle causes damage in a traffic accident, liability for compensation shall be borne in accordance with the road traffic safety law and the relevant provisions of this Law.
Article 1213
If a motor vehicle causes damage in a traffic accident and the motor vehicle is found responsible, the insurer of the compulsory insurance for the motor vehicle shall first compensate within the limits of the compulsory insurance liability; any deficiency shall be compensated by the insurer of the commercial insurance of the motor vehicle according to the terms of the insurance contract; if it is still insufficient or the motor vehicle has not purchased commercial insurance, the tortfeasor shall compensate.
Insurance Law of the People's Republic of China
Article 17, Paragraph 2
Regarding clauses in an insurance contract that exempt the insurer from liability, the insurer shall, when concluding the contract, provide a notice on the insurance application, insurance policy, or other insurance documents sufficient to draw the policyholder's attention, and clearly explain the content of the clause to the policyholder in writing or orally; if no notice or clear explanation is given, the clause shall not take effect.
[1] The author's perspective
In legal terms, an exclusion clause is a clause that exempts the insurer from liability, including clauses that exempt or limit the insurer's liability in standard contract texts provided by the insurer, such as liability exemption clauses, deductibles, exemption rates, proportionate payments, or benefits. In general circumstances, exclusion clauses require the insurer to fulfill the duty to inform the insured; otherwise, the exclusion clauses are not effective. In special circumstances, if the insurer uses situations prohibited by laws or administrative regulations as grounds for exemption in the insurance contract, the exclusion clause becomes effective once the insurer fulfills the duty to inform regarding that part of the clause. In other words, such exclusion clauses only require the insurer to fulfill the duty to inform and do not require the insurer to perform the duty of clear explanation.
In this case, the driver Xu engaged in a hit-and-run after the traffic accident. This behavior is prohibited under China's Road Traffic Safety Laws, and insurance companies also consider such behavior as a ground for exemption under insurance contract clauses. Therefore, when applying this exemption clause to deny insurance liability, the insurance company only needs to prove that it has fulfilled its obligation to inform the policyholder. At the time of the insurance contract's conclusion in this case, the insurer highlighted the exemption clause regarding 'hit-and-run traffic accidents' in bold and black font, which can be deemed as the insurance company fulfilling its duty to inform. Consequently, during the second trial of this case, Xu's claim that the clause is invalid on the grounds that the insurer did not fulfill the explicit explanation duty is not supported by the people's court.
